Tax Court of Canada Judgments

Citation:  2007TCC688

Court File No. 2006-3560(IT)I

TAX COURT OF CANADA

BETWEEN:

GURUCHANDRANATH TEELUCK

Appellant

‑ and ‑

HER MAJESTY THE QUEEN

Respondent

* * * * *

REASONS FOR JUDGMENT

THE HONOURABLE JUSTICE LITTLE

in the Courts Administration Service,

180 Queen Street West., Toronto, Ontario

on Thursday, August 30, 2007, at 9:30 a.m.

* * * * *

APPEARANCES:

Ms. Samantha Hurst (ph)                                                                             for the Respondent

A.S.A.P. Reporting Services Inc. 8 2007

200 Elgin Street, Suite 1105              130 King Street West, Suite 1800

Ottawa, Ontario K2P 1L5                  Toronto, Ontario M5X 1E3

(613) 564‑2727                                   (416) 861‑8720

                                                                                     Toronto, Ontario

--- Upon resuming on Thursday, August 30, 2007

    at 9:35 a.m.

THE REGISTRAR:  This sitting of the Tax Court of Canada at Toronto is resumed.  Before the Court is File No. 2006-3560(IT)I, Guruchandranath Teeluck and Her Majesty The Queen, for judgment.  The Appellant is not present.  Mrs. Samantha Hurst for the Respondent is here.

JUSTICE LITTLE:  Thank you, Mr. Registrar.

I am going to give the Reasons for Judgment on Teeluck versus The Queen.

A.     Facts

The facts are:

(1) the Appellant was born in Mauritius;

(2) the Appellant moved to Canada in 1981 and he has lived in Canada since 1981;

(3) the Appellant became a Canadian citizen in 1992;

(4)  prior to October 2001 the Appellant lived as a tenant in Apartment No. 207, 3561 Eglinton Avenue, Toronto;

(5)  in October 2001 the Appellant moved to a home which he had purchased at 26 Thorndale Road in the City of Brampton, Ontario;

(6)  the Appellant is the son of Barossa Teeluck hereinafter referred to as (the “Appellant's Father” or “His Father”);

(7)  the Appellant's Father was born in Mauritius on August 14, 1923.  The Appellant's Father is currently 84 years of age;

(8)  the Appellant's Father has always lived in Mauritius;

(9)  when the Appellant filed his Canadian income tax returns for the 1999, 2001 and 2003 taxation years, he claimed that he was entitled to an Equivalent to Spouse Claim with respect to His Father;

(10) in filing his income tax returns, the Appellant claimed the following tax credits with respect to His Father:  1999, $5,718; 2001, $6,293; and 2003, $6,586.  In these numbers I am using the amounts claimed for federal income tax purposes.  There is a slight difference with respect to claims made by the Appellant for Ontario tax purposes;

(11) by Notices of Assessment dated August 2, 2005, July 21, 2005 and May 20, 2005 the Dependent Tax Credit Claim by the Appellant for His Father was allowed by the Minister of National Revenue (the “Minister”).  By Notices of Reassessment dated June 8, 2006, October 3, 2005 and October 24, 2005 for the 1999, 2001 and 2003 years, respectively, the Minister reassessed to disallow the Dependent's Tax Credit Claim; and

(12) the Appellant filed an appeal to this Court.

B.     Issues

                 The issues to be decided are:

(1)  whether the Appellant's Father was a resident of Canada during the 1999, 2001 and 2003 taxation years;

(2)  whether the Appellant maintained either alone or jointly with one or more other persons a self‑contained domestic establishment in which he lived with His Father and in which he supported His Father during the 1999, 2001 and 2003 taxation years;

(3)  whether the Appellant's Father was wholly dependent on the Appellant at any time during the 1999, 2001 and 2003 taxation years; and

(4)  whether the Appellant is entitled to deduct an amount for a wholly dependent person in respect of His Father.

C.     Analysis and Decision

                 First of all, I will quote briefly from subsection 118(1) of the Income Tax Act (the “Act”).  It says:

For the purpose of computing the tax payable under this Part by an individual [in other words, by the Appellant] for a taxation year, there may be deducted an amount determined by the formula

    A X B

where

A is the appropriate percentage for the year; and

B is the total of

Then the Act talks about wholly dependent person in paragraph 118(1)(b):

in the case of an individual who does not claim a deduction for the year because of paragraph (a) and who, at any time in the year, (i)   is

(A) a person who is  unmarried and who does not live in a common-law partnership or

Subparagraph 118(1)(b)(ii) reads as follows:

whether alone or jointly with one or more other persons, maintains a self-contained domestic establishment (in which the individual [that is the Appellant] lives and actually supports in that establishment a person who, at that time, is …

(B) wholly dependent for support on the individual …

(C) related to the individual…

Then it talks about other items that do not apply.

I believe that the important points to note are (A) in which the individual lives and actually supports in that establishment a person who was related to the individual.  The father is clearly related.  The Appellant is clearly unmarried, but there is the problem of:  “Does the Appellant live with and support His Father in that establishment”?

The evidence that I heard yesterday established that the Appellant's Father was not a resident of Canada during the 1999, 2001 and 2003 taxation years.  In fact, while the Appellant's Father visited the Appellant in 1998, there was no evidence that the Appellant’s Father visited the Appellant in 1999, 2001 or 2003.

In arguing his position, the Appellant referred to the Guide prepared by the Canada Revenue Agency.  The Appellant maintained that he qualified for the tax credit because His Father lived with him in a house that he maintained and the Appellant specifically emphasized that he lived with His Father -- in the past tense. The Appellant suggests that these are the words in the Guide -- that he has lived with him some time in the past year.

I cannot agree with the interpretation made by the Appellant because during 1999, 2001 and 2003 the Appellant lived in Canada and the Appellant's Father lived in Mauritius.  It is noted that the Appellant maintained that he paid the expenses for the house where His Father lived in Mauritius.

I emphasize that according to the words of the Act -- and I emphasize not the words of the Guide ‑‑ the Appellant's Father must have lived with the Appellant in the establishment. We cannot ignore the specific words of the section.  This requirement to live with the dependent does not apply if the dependent is a child of the Appellant.  Clause 118(1)(b)(ii)(A) says “except in the case of a child of the individual, resident in Canada”.

That is the exception made to the rule.  The general rule is that the dependent must live with the Appellant in the establishment in which the Appellant lives.

The Appellant does not, in my view, fit within the words contained in paragraph 118(1)(b) and therefore he is not entitled to claim the tax credit.

I also wish to note that to qualify for the tax credit it is necessary to meet the specific words of the Act.  The words contained in the Guide are not the words which must be satisfied.  The Act is the provision that must be satisfied.

Before closing, I wish to note that the Appellant filed a number of documents in support of his position.

Exhibit A-4 is a money order issued by the Canadian Imperial Bank of Commerce in the amount of $250.  It was issued on March 31, 1997. 

The second part of that exhibit is a bank statement issued by the State Bank of Mauritius in 2006. 

The third document connected with Exhibit A-4 is a statement from the Central Electricity Board of Mauritius in 2006. 

A further statement with Exhibit A-4 is a statement from Mauritius Telecom for February 2007 and another statement for July-August 2006.

Exhibit A-5 is a money order issued by the CIBC in the amount of $250.  This money order was issued on March 31, 1997.

I wish to note that the money order in Exhibit A-5 appears to be a copy of the money order filed as Exhibit A-4.  Same date, same amount, same bank, same numbers.

In my review of the above documents, I note that none of the documents that were filed by the Appellant deal with any evidence to support any claims for the 1999, 2001 and 2003 taxation years.

The appeals are dismissed without costs.

Before closing, I wish to state that in my opinion the Appellant appears to be an exemplary son providing financial assistance and support to his elderly father.  However, in my opinion, the Appellant does not come within the specific words of the Act in order to claim the tax credit.  The appeals are dismissed.

--- Whereupon the Court concluded at 9:42 a.m.

    I HEREBY CERTIFY THAT I have, to the best

of my skills and abilities, accurately recorded

   by Stenomask and transcribed therefrom, the

              foregoing proceeding.

       Suzanne Hubbard, Stenomask Reporter